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Author: Adele Ramos
The Government of Belize is in a two-billion-dollar debt predication—that is according to the report, Belize 2012 – Economic and Financial Update, released on the website of the Central Bank of Belize today, Wednesday, June 20.
“The Government’s latest projections
indicate that the country is facing sizeable financing gaps from 2013
onwards; the authorities are in active discussions with multilateral
partners, but it is clear that multilateral funds alone will not close
these expected shortfalls,” said the report.
The debt review had been
commissioned by Prime Minister and Minister of Finance Dean Barrow soon
after his return to office in March, when he put together a team led by
former Minister of Economic Development Mark Espat, to undertake a
comprehensive debt review—a review which now makes the point that the
country cannot afford its existing debts, and it is now trying to find a
sustainable way forward.
The document sets out a profile of
exactly what Belize owes, and the debts include nearly half-a-billion
dollars ($456.5 million) to the Michael Ashcroft group. Estimated
compensation to the former owners of the Belize Telemedia Limited and
the Belize Electricity Limited are together estimated at BZ$540 million.
The gloomy news is about the
proceeds of oil exploration, which the report said peaked in 2009, and
continues to decline with no immediate prospect of a boost in revenues.
The report makes the point that, “...no new commercially-viable oil
finds have been made in Belize since 2005 – contrary to the hopes of
Belize and its creditors at the time of the 2007 restructuring.”
On top of the expected claims for
BTL and BEL, Government has listed $47 million in debts to NEWCO, a $4
million arbitration award won over an airport concession cancelled under
the Musa administration, as well as $43 million for land claims.
There is BZ$116.5 million in awards
to the Ashcroft group, which the Barrow administration continues to
resist. They are (1) the 2009 London Court of International Arbitration
(LCIA) award for BZ$43.8 million (plus accrued interest) for BCB
Holdings and the Belize Bank; (2) BZ$33.5 million (plus accrued
interest) for the Belize Bank; and (3) a 2009 LCIA arbitration award for
BZ$39.2 million (plus accrued interest), which has been assigned by the
former BTL shareholders to the Belize Social Development Ltd (BSDL).
Belize’s overall direct public debt
is listed at US$1.182 billion, with US$554 million of that being
external commercial debt, essentially the super bond. This is the
portion that the Barrow administration is now attempting to renegotiate.
“Belize is now moving to address its
additional liabilities and determine appropriate strategies for dealing
with the forecast collapse in oil revenue; this notwithstanding,
overall obligations look certain to exceed the country’s capacity to
pay, even when conservative assumptions are used,” said the report.
We understand that with the
conclusion of the review, the Government team will next move into
negotiations with creditors and bondholders who had subscribed to the
super bond, through which the national commercial debt was largely
restructured back in 2007.
Among those who the government would
engage is the Committee of Creditors, recently formed by a group of
foreign bondholders to protect their interests in the negotiations.
According to the debt review, the
critical year seems to be 2013, when the budget deficit would record
huge and unsustainable spreads of nearly 8%.
“The Government is facing sizeable
financing gaps from 2013 onwards; using the Mid-Point for the
nationalization compensation amounts that the Government must pay, these
gaps reach 8.0% of GDP in 2014 and decline gradually to reach 7.3% of
GDP in 2017,” said the report.
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